updated 11/18/2009 10:39:07 AM ET 2009-11-18T15:39:07

Guests: Jeff Sharlet, Frank Schaeffer, Naomi Klein, Ana Marie Cox, Kent Jones

RACHEL MADDOW, HOST:  Good evening, Keith, thank you for that.

And thank you at home for staying with us over the course of the next hour.

Tonight, the president‘s trip abroad is greeted with a boiling over of the political rhetoric against him here at home.

And your tax dollars get set on fire in giant multimillion dollar pyres lit by war contractors.  You‘ll never guess what happened to the guys who got caught in the vodka and coconut bra scandal in Afghanistan and what contract they‘ve just received now.

The congressman who used a baby as a prop on the floor of the House is up to it, again.

And one of Sarah Palin‘s chief slimies (ph) gives THE RACHEL MADDOW SHOW her response to the slim-age.

Frank Schaeffer joins us, Naomi Klein joins us, and Ana Marie Cox—all here this hour for all that and more.

But we begin tonight with why we won‘t get health reform, if we don‘t get health reform.

A previously unknown conservative Democratic congressman is trying to make the entire health care reform contingent on him and his effort to use reform to usher in the biggest restrictions on abortion in a generation.  He, of course, is Congressman Bart Stupak of Michigan.  And he is now doubling-down on his pledge to kill health reform if it doesn‘t include the anti-abortion language he help author.  Mr. Stupak making the media rounds today, insisting his anti-abortion language must—I repeat—must, stay in the bill.

(BEGIN VIDEO CLIP)

REP. BART STUPAK (D), MICHIGAN:  We had a fair-and-square vote.  We won.  Fifty-five percent of all the representatives said we should not have public funds paying for abortion.  So, you went on the floor.  Now, suddenly, you want to us to come back and compromise.  And then so they had to give me my amendment, and then we beat them, now, suddenly, they want us to compromise.

(END VIDEO CLIP)

MADDOW:  Mr. Stupak is now pledging not only to personally vote against health care reform if it‘s not anti-abortion enough, he‘s also promising to kill reform altogether if he doesn‘t get his way.  He‘s saying he‘s speaking not only for himself but for a whole bunch of other members of Congress, too.

(BEGIN VIDEO CLIP)

STUPAK:  Then they‘re not going to take it out.  If they do, health care will not move forward.  If they strip our language, just strip it out and they keep the Capps amendment, at least 10 to 15 to 20 of us would not vote for it.

(END VIDEO CLIP)

MADDOW:  At least 10 to 15 to 20 of us will not vote for it.  A weighty threat, right?  A weighty threat that is weakened somewhat by the fact that just last week, Mr. Stupak said he had 40 votes that could bring down health care reform.  What happened to the other 20, 25, 30 of his supposed votes?

Mr. Stupak‘s apparent antiabortion mentor, Republican Congressman Joe Pitts, is also making news tonight.  What‘s known as the Stupak Amendment is actually the Stupak-Pitts Amendment, because Democrat Bart Stupak and Republican Joe Pitts co-wrote and co-introduce the antiabortion language.

We spoke with Congressman Pitts‘ office today.  They gave us a one-word answer as to whether or not Mr. Pitts would support a final health reform bill that includes that antiabortion language he helped put in it.  The answer from Congressman Pitts‘ office and I quote, “No.”  Not probably not.  Not unlikely.  Not wait and see.  Just no—N-O—no.

So, why is anyone checking with Joe Pitts to see what he wants in the bill if he‘s promising to vote against it no matter what‘s in it?

On the Senate side, it seems like the man now taking the lead role in blocking health reform is Republican Senator Tom Coburn.  Mr. Coburn now telling reporters he plans to force the entire health reform bill to be read aloud word-by-word on the Senate floor before any debate can go forward—every word of every page.  For those of you keeping score at home, the Senate version of the bill is expected to be about 1,000 pages long, which could theoretically take a Senate clerk a few days to read, or Senate Democrats could hire the speed-reader who is enlisted by House Democrats to read the 900-page climate change bill back aloud—hired to read the climate change bill aloud way back in May, you might recall.

(BEGIN VIDEO CLIP)

REP. HENRY WAXMAN (D), CALIFORNIA:  The clerk will read the bill.

(END VIDEO CLIP)

MADDOW:  Go, go.

We are now heading into the home stretch on health reform.  And as we face down the prospect of getting health reform or not getting health reform, there remains an awkward connection among many of the people posing the biggest threat to it.  And the connection is C Street, the Washington, D.C. townhouse operated by the secretive religious group the Family.

Bart Stupak and Tom Coburn are both residents of the C Street houses.  Joe Pitts is reported to have high-ranking connections to the Family, which runs C Street.

Think about what else is going on right now in Senator Coburn‘s life, for example, as he‘s deciding to step out not only against health reform but also against the latest veterans health bill.  Senator Coburn has admitted to being the secret cash negotiator for fellow C Streeter John Ensign when Ensign was looking to pay off a campaign staffer with whom he had been having an affair.  That affair has launched a Senate Ethics Committee investigation.  It may yet launch a Justice Department investigation and it still continues to unfold.

ABC News is expected to air yet new allegations from John Ensign‘s chief accuser, the wife—excuse me—the husband of his mistress next week.  And Politico.com is now reporting further names and dates details on the alleged cash and ethics scandal that unfolded while Ensign was living at the C Street house and trying to bring the affair to a close.

The Ensign sex scandal and the Mark Sanford sex scandal and later, the alleged Chip Pickering sex scandal have all been tied to C Street over the past year.  Those stories dragged C Street into the national headlines and not in a good way for a secretive organization that doesn‘t like attention.

Perhaps as a result of that attention, news today broken by Zachary Roth at the Web site Talking Points Memo, that the C Street house has been stripped of its tax-exempt status.  The house that‘s basically operates as a dorm for congressmen has enjoyed tax-exempt status for about two decades because it is listed on tax records as a church—but no longer.

According to the Washington, D.C. Office of Tax and Revenue, quote, “It was determined that portions of it were being rented out for private residential purposes.  And, therefore, that portion of the house is no longer tax-exempt.”

And TPM suggests the tip off for the tax and revenue inspection may have followed a citizen complaint following C Street‘s adverse publicity this year.

This was never the most important thing to know about C Street, but it was always a really interesting and telling detail, that this house, where members of Congress lived and allegedly kept one another secrets and had their affairs was technically a church.

But the living out loud propensity among these supposedly pious conservative C Streeters now appears to have ruined at least one part of the sweetheart financial deal that the C Street and the Family members have enjoyed.

Joining us now is Jeff Sharlet, contributing editor to “Harper‘s” magazine and author of “The Family: The Secret Fundamentalism at the Heart of American Power.”

Jeff, it‘s nice to see you again.  Thanks for joining us.

JEFF SHARLET, HARPER‘S MAGAZINE:  Hey, Rachel.  Great to be back.

MADDOW:  How did C Street manage to get tax-exempt status in the first place?  And how long did they have it?

SHARLET:  Well, they‘ve had it since 1989 when they got the house.  They went to—they went to the D.C. tax office and they said, “What we‘re going to be doing here is holding worship services and preparing for missionary activities.”  And when you go back and look at their tax records, they described those who lived there as involved in ministry or, frankly, as missionaries.

And D.C. tax office let them get away with it for 20 years until someone—apparently, someone filed a complaint and they went and looked at it.  They said, “Hey, this isn‘t like any church we‘ve ever seen.”

MADDOW:  From what you‘ve known and what you‘ve been able to report on

the Family and C Street, do the living circumstances of members of Congress

who are housed there bear any resemblance to that sort of a description at

all?  I mean, is there any way they could be seen as just doing missionary

·         preparing for missionary work there?

           

SHARLET:  Well, absolutely not.  In fact, Bart Stupak has been very emphatic in saying that he just rents a room in this house and it has no religious meaning and that there‘s no organization behind it.  And he added, for good measure, that he had never seen me in his room, which is absolutely true.

But, the reality is, there are religious activities going on there, but that doesn‘t entitle them to take that tax exemption for the rooms that they‘re renting out and for the income that they‘re generating, which they should also be reporting.  So, I think there‘s actually more tax investigations ahead for them.

MADDOW:  I was just going to ask you if there‘s a possibility that some of these members of Congress could find themselves in tax trouble, based on who they‘ve been writing their rent checks to and the tax-exempt status of those entities.

SHARLET:  That‘s the big question.  Who are they writing the check to?  Because there‘s something called the C Street Center.  Even though the house is registered—is owned by another group called Youth with a Mission, it‘s actually owned by the C Street Center.

It doesn‘t file 990 tax forms, which you can do, you can get away with it if you don‘t take in any money.  But they are taking in money.  So, where are the checks going to if not the C Street Center?

MADDOW:  On the bigger issue of the Family, the influence of C Streeters in Washington, and of this religious organization in our politics, you‘ve written about the leader of the Family, Doug Coe, a letter of the Family, saying the more invisible you can make your organization, the more influence it will have.

We know that they are—by design—a secretive organization.  But this past year has blown that up for them a little bit.  Is this higher profile they‘re suffering right now a problem for them in terms of their influence?

SHARLET:  I think it absolutely is.  You know, again, you look at Bart Stupak.  He passes his amendment.  He goes home for a victory lap in his home district, doing a town hall, opens up, the first questions he gets asked are about C Street and people are saying, “What are you doing at C Street and what‘s your relationship to Joe Pitts?  This other C Streeter.

What‘s your relationship to Zach Wamp?  The very far right-wing congressman who also lives at C Street, Tennessee—running for governor of Tennessee.  And here‘s this Democrat giving money to his far right-wing C Street brother.

So, it‘s making things hot for all the politicians who are involved.

MADDOW:  Jeff Sharlet, contributing editor to “Harper‘s” magazine and author of “The Family”—thanks very much for your time tonight, Jeff.  Always good to have your insight.

SHARLET:  Thanks, Rachel.

MADDOW:  There is a new and creative and biblical way to not just oppose President Obama, but to vaguely sort of threaten President Obama.  Vice President Cheney is also making news for all the wrong reasons as he criticizes the president while he‘s abroad.  All that with religious right veteran and author, Frank Schaeffer—next.

Stay tuned.

(COMMERCIAL BREAK)

MADDOW:  In her new book, “Going Rogue,” Sarah Palin spends considerable ink settling perceived scores with the McCain campaign senior advisor, Nicolle Wallace.  Nicolle Wallace has graciously provided her response to former Governor Palin at length to us.  That‘s a little later on in the show.  It‘s exclusive here.  It is kind of mind-blowing to tell you the truth.  You will not want to miss it.

Stay with us.

(COMMERCIAL BREAK)

MADDOW:  The two most powerful men in the world just met.  President Obama and Chinese President Hu Jintao spoke in Beijing about China‘s currency policy, climate change, human rights.  President Obama pressed President Hu on resuming talks with the Dalai Lama, to try to resolve the crisis in Tibet.

Afterward, there was a state dinner where the official People‘s Liberation Army band played hits like “We Are the World,” “I Just Called to Say I Love You” and “In the Mood.”  Yes, the military band actually played “In the Mood.”  Oh, diplomacy.

With our president overseas, Republicans and conservatives here at home have been taking the opportunity to crank up their criticism of him.  Former Vice President Dick Cheney telling Politico.com that President Obama advertised weakness when he bowed ceremonially to the emperor of Japan.  Cheney said, quote, “Our friends and allies don‘t expect it and our enemies see it as a sign of weakness.  There is no reason for an American president to bow to anyone.”

He does have a point.  I mean, imagine an American president bowing to anyone.  Imagine.  Imagine, say, oh, President Nixon bowing to Chairman Mao in China, yes.  Imagine, say, President Nixon—oh, there he is, again, bowing to Japanese Emperor Hirohito, that was here in America.  Imagine President Eisenhower bowing to Charles de Gaulle of France—France!

And four our pals in the press, when a former vice president, like, Dick Cheney says something like there‘s no reason for an American president to bow to anyone, the appropriate response is to say, “What else do you have against President Eisenhower, sir, or President Nixon?”  Or you could just copy down what Cheney says and write a whole story as if Cheney really has a point, which, of course, he doesn‘t—at all.  But I digress.

Beyond the former vice president, Mr. Obama‘s trip abroad has generally brought out the unhinged among the president‘s critics.  The troubled conservative “Washington Times” newspaper, for example, allowed their editor emeritus, Wesley Pruden, to assess President Obama‘s trip abroad this way, quote, “”Mr. Obama, unlike his predecessors, likely knows no better.  It‘s no fault of the president that he has no natural instinct or blood impulse for what the America of the 57 states is about.  He was sired by a Kenyan father, born to a mother attracted to men of the third world and reared by grandparents in Hawaii, a paradise far from the American mainstream.”

That was published in an actual newspaper.

On an actual cable TV channel, host Glenn Beck assessed Democratic efforts at health reform with equal intellectual rigor.

(BEGIN VIDEO CLIP)

GLENN BECK, FOX NEWS HOST:  America has spoken clearly, consistently, we are—excuse this analogy but I feel like it‘s true—we‘re the young girls saying, “No, no, help me” and the government is Roland Polanski.

(END VIDEO CLIP)

MADDOW:  From the same network, another host, Bill O‘Reilly, couldn‘t help himself either, calling into Mr. Beck‘s radio program with this warning to the Democratic speaker of the House.

(BEGIN AUDIO CLIP)

BILL O‘REILLY, FOX NEWS HOST:  I think people, when they figure out how badly they‘re going to get hurt in the next few years, there‘s going to be a tea party on taxes and it‘s going to get nasty.  Nancy Pelosi is going to be bobbing up and down in the Boston Harbor.

(END AUDIO CLIP)

MADDOW:  And then, there‘s this biblical quote making the rounds in anti-Obama circles.  As reported this week in the “Christian Science Monitor,” “Pray for President Obama, Psalm 109, verse eight.”  What‘s psalm 109 version eight?  Well, it reads, “Let his days be few; and let another take his office.”  Let his days be few.  It‘s followed immediately by another verse, “Let his children be fatherless, and his wife a widow.”

And don‘t forget, that sentiment is now being merchandised on bumper stickers, on mouse pads, on Teddy Bears on aprons, framed tiles—those are nice.  Keepsake boxes, t-shirts?  “Let his days be few”—cute on a Teddy Bear.

Has anybody else crept out by this?

Joining us now is Frank Schaeffer, whose father, Francis Schaeffer helped shape the evangelical movement in the United States.  Mr. Shafer grew up in the religious far-right and he‘s the author of “Patience with God: Faith for People Who Don‘t Like Religion (or Atheism).”

Mr. Schaeffer, thanks very much for coming back on the show.

FRANK SCHAEFFER, AUTHOR, “PATIENCE WITH GOD”:  Thanks for having me on.

MADDOW:  “Let his days be few; and let another take his office,” “Let his children be fatherless, and his wife a widow.”  This is such strong language in secular terms about President Obama.  Can you tell me if this means something less threatening to people hearing this in a biblical context?

SCHAEFFER:  No, actually, it means something more threatening.  I think the situation that I find genuinely frightening right now is that you have a ramping up of biblical language—language from the antiabortion movement, for instance, death panels and this sort of thing.  And what it‘s coalescing into is branding Obama as Hitler, as they‘ve already called him, as something foreign to our shores.  We‘re reminded of that.  He‘s born in Kenya—as brown, as black, above all, as not us.  He is Sarah Palin‘s not a real American.

But now, it turns out, that he joins the ranks of the unjust kings of ancient Israel, unjust rulers, to which all these biblical illusions are directed who should be slaughtered, if not by God, then by just men.

So, there‘s a direct parallel here with Timothy McVeigh‘s t-shirt on the day of the Oklahoma City bombing in which he said that the tree of liberty had to be watered occasionally by the blood of tyrants.  And that quote, we saw again at a meeting at which Obama was present being carried on a placard by someone carrying a loaded weapon.

What we‘re looking at right now is two things going on.  We see the evangelical groups that I talk about in my new book, “Patience with God,” enthralled by an apocalyptic vision that I go into in some detail there.  They represent the millions of people who have turned the “Left Behind” series into best sellers.  Most of them are not crazy, they‘re just deluded.

But there is a crazy fringe to whom all these little messages that have been pouring out of FOX News, now on a bumper sticker, talking about doing away with Obama, asking God to kill him.

Really, this is trolling for assassins.  And this is serious business. 

It‘s un-American.  It‘s unpatriotic.

And it goes to show that the religious right, the Republican far right, have coalesced into a group that truly want American revolution.  And if it turns out to be blood in the streets and death, so be it.  This is not funny stuff anymore.  They cannot be dismissed as just crazies on the fringe.  It only takes one.

You know, look at “The Boston Globe” article a few weeks ago saying that the threat level faced by the Secrete Service has gone up 400 percent, higher than any other time in 52 years for any president, Democrat or Republican.  These are no jokes.

And as I talk about in “Patience with God,” if you trace these origins back to this paranoid, evangelical group, of which me and my father, sadly, were not only leaders, but leaders in the ‘70s and ‘80s, the foot soldiers that people like Dick Armey and others are using now to push their political agenda onto health care, are also people that have within their ranks, people, such as the person who murdered Dr. Tiller and killed three police officers in Pittsburgh because they thought Obama would take away their guns.

This bumper sticker simply says to them: “It‘s open season.”

MADDOW:  And to be clear—I mean, over-the-top political criticism is as American as apple pie.  And incredibly intense criticism has been lobbied against George W. Bush and against every president that‘s gone before modern times.  But you‘re saying that there‘s essentially a religious inflection in the most extreme of the commentary against Obama, that sort—that‘s operating on a religious level, that‘s a signal to a religiously-minded audience.

SCHAEFFER:  Absolutely.  Look, this is the American version of the Taliban.  The Taliban quotes the Quran and al Qaeda quotes certain verses in the Quran, in and out of context, calling for jihad and bloody war and the curse of Allah on infidels.

This is the Old Testament biblical equivalent of calling for “Holy War.”  Now, most Americans will just see the bumper sticker and smile and think that it‘s facetious.  Unfortunately, there are 22 million Americans or so who just call themselves super-conservative evangelicals.  Of this, a small minority might be violent, but the general atmosphere here is really getting heated.

And what surprises me is that responsible—if you can put it that way—Republican leadership and the editors of some of these Christian magazines, et cetera, et cetera, do not stand-up in holy hour (ph) and denounce this.

You know, they‘re always asking, “Where is the Islamic leadership denouncing terrorism?  Why aren‘t the moderates speaking out?”  Well, I challenge the folks who I used to work with, that I talk about in my book, “Patience with God,” and I would just say to them, “Where the hell are you?  This is not funny anymore.  And be it on your head if something happens to our president, if you are going to go around supporting and not speaking out against this stuff.

It‘s just not a question of who‘s doing it.  The bigger question is:

where are the people speaking out against these things?  I don‘t hear those voices raised in the evangelical fundamentalist community.  And until I do, I—and my opinion is, they are culpable.

One last thing on this, I think it points at the fact that Obama supporters, of which I have been one since he began running, have better start speaking up in support of him and not sniping at him all the time because he‘s not moving toward change as fast as we‘d like in every area.  This is serious stuff.  The chips are down.  He has real enemies.  Some of them are violent.

And as far as I‘m concerned, it‘s time to support our president, stand with him, and not only wish him the best, but as a believing Christian myself, pray for his safety in the face of these religious maniacs, who every day, you know, one time I was on your show awhile back and they were talking about, “Is he the antichrist?”  Now, they are asking he‘s an unjust ruler and they‘re asking God to strike him down.  There are very not many steps left on this insane path.

MADDOW:  Frank Schaeffer is the author of “Patience with God”—Mr.

Schaeffer, thank you for your time tonight.  Thank you.

SCHAEFFER:  Thanks for having me on.

MADDOW:  If you move government corruption, may I recommend New Zealand?  It‘s apparently the least corrupt country on earth.  The USA?  Well, Rod Blagojevich and William Jefferson both come from the USA, and that‘s just our public sector corruption.  Author and journalist and lefty ideological rock star Naomi Klein joins us next.

Stay tuned.

(COMMERCIAL BREAK)

MADDOW:  We have officially entered the time of year where annoying lists are made and published.  And today, amid the top 10 best and worst music videos and celebrity scandals and iPhone apps of 2009, vote for me, came a much heavier list, one that ranks the countries of the world in order of corruption.

Spoiler alert: we are fighting wars in two of the five countries considered to be the most corrupt on the face of the earth.

The watchdog group Transparency International produces an annual ranking of public sector corruption in 180 countries.  And according to this year‘s list, New Zealand is the cleanest, most above-board country on earth.  Woohoo!  Kiwis.  The United States, number 19.  Thanks, New Jersey.  Stay strong, Illinois. 

Meanwhile, way down at the bottom, Iraq comes in at number 176, which makes it the fifth most corrupt country in the world, which happens to be an improvement from last year.  And at 179 out of 180, the second most corrupt country in the world, Afghanistan, which reportedly got more corrupt this year compared to last year. 

And yes, that is the government whose perceived legitimacy among Afghans is supposed to be the key factor in determining our military‘s success in Afghanistan. 

Speaking of supposed military success and its relationship to setting giant piles of money on fire, the Justice Department just announced the indictment of Kuwait-based U.S. military contractor accused of defrauding the U.S. government out of tens of millions of dollars. 

Public Warehousing Company, which has changed its name to the less-corruptible sounding “Agility,” has received an astounding $8.5 billion in food supply contracts from the U.S. military since 2003. 

It now stands accused of grossly overcharging the U.S. government for that food, double charging for transportation and generally ripping us off at will like we were tourists in bus stations at night. 

The investigation is ongoing and the company won‘t be allowed to bid on other contracts until it‘s resolved.  But if you think these accusations will create enough of a scandal to threaten the company‘s livelihood, consider the other new wartime contracting news coming out of Iraq today. 

The Iraqi government has chosen a new contractor to handle security at Baghdad‘s airport.  The $22.5 million contract went to Armor Group.  And if when you hear the name Armor Group, your gag reflex starts up a little bit, it‘s because you might be remembering the last time Armor Group made news - that was this fall when the project on government oversight released those pictures showing the Caligula complex enjoyed after hours plus some Armor Group employees whose day job was guarding the U.S. embassy in Kabul.  Now, they‘re in charge of the Baghdad airport. 

Joining us now is Naomi Klein.  The 10th anniversary of her book, “No Logo,” comes out on Friday.  Naomi, it is such a pleasure to have you here.  Thank you for coming in.

NAOMI KLEIN, AUTHOR, “NO LOGO”:  Great to be here. 

MADDOW:  One of the things you write about in the new expanded intro to “No Logo” is the hollowing out of government with regard to contractors. 

KLEIN:  Yes.

MADDOW:  What do you mean by that? 

KLEIN:  Well, “No Logo” came out 10 years ago.  And what it was tracking was this trend in the corporate sector for companies like Nike and Microsoft to announce that they didn‘t want to produce things anymore.  They wanted to produce ideas.  They‘re in the ideas business. 

So we saw the emergence of these hollow corporations which outsourced everything and they just poured their money into marketing.  And I think that they‘re a hallmark of the Bush years.  And the real legacy of the Bush years is the application of that logic to government. 

            So you had all these guys like Rumsfeld who had spent the past

two decades in the corporate world were all pumped up and hyped up on the

latest management consulting trend and they wanted to bring them into

government. 

And that was Rumsfeld‘s transformation vision.  You know, his obsession with transforming the U.S. military - a lot of it had to do with hollowing out, turning it into a brand.  The brand was dominance around the world. 

But the actual work, the same way Nike outsources all of its production to contractors in China and Thailand.  Well, he would outsource of the work of invasion and occupation to Blackwater and Armor Group and Halliburton. 

And we‘ve seen - you know, that‘s why I updated the book in that way because I think that that‘s been the most significant about them in the world of branding, is the application of this corporate logic to government and we‘ve seen the effects of it in these corruption scandals. 

In the same way, Rachel, that we saw in the ‘90s, the explosion of all of these sweat shop scandals and all these companies going, “Oh, I‘m shocked,” you know, that our suppliers have been using child labor or whatever it is.  You lose control when you are pitting all of your contractors against each other in that way. 

MADDOW:  Well, you say we‘re not going to do the work.  We are going to sell the idea of the work being done and then make sure that somebody else actually puts rubber to road.  Well, let me ask you about something else that has broken that made me think about your work, both in this and in “The Shock Doctrine.” 

The number of former Bush administration officials going into private sector business to cash in on the war in Iraq, oil consulting, business consulting in Iraq - it‘s kind of astounding. 

Peter Galbraith, a former Bush administration official, most recently working for the U.N. in Afghanistan, supposedly poised to cash in on something like $100 million personally in oil contract money from Iraq.  Does that fit the pattern or are you surprised by this?  Is this an outlier? 

KLEIN:  It absolutely fits the pattern because this war is the most privatized war in modern history.  And Donald Rumsfeld designed it this way as a for profit enterprise.  And it was a free-for-all. 

You know, when I was in Iraq in the same period when Peter Galbraith was advising the Kurds on the one hand as that they could have a Constitution that devolved power to the regions and allowed them to do something that had been unheard of in Iraq, which is - for the regions to sign deals with foreign multinationals. 

And Iraqis were called conspiracy theorists at the time for saying, “You know what?  We think the U.S. officials are actually trying to break up our country because it‘s easier to get the oil if you‘re dealing with a weaker regional government than when you have to deal with a stronger central government.” 

So it turns out that Peter Galbraith, while inserting clauses into Iraq‘s Constitution that, we were told, was stabilizing the country, the key to stability.  He also, it turns out, had a five percent share in one of the Kurdish oil fields, which would have been entirely impossible were it not for the language in the Constitution that he personally inserted. 

And you know, you mentioned that he was working for the Bush administration.  He actually was working for the Kurds.  And he started off as a paid advisor.  Then, he was an unpaid adviser.  So this is why I think it‘s important to say it is legal what he did, but it‘s only legal because there were no laws. 

MADDOW:  Right. 

KLEIN:  So - and this, once again, was created by the Bush administration.  It created what one former CPA official - Coalition Provision Authority official - described it as a free fraud zone. 

Anything went.  We saw it with Blackwater.  But this was true for all of these government consultants who didn‘t have conflict-of-interest rules applied to them.  You can‘t do that.  If you are working directly for the U.S. government, you are not allowed to benefit directly ...

MADDOW:  Sure.

KLEIN:  ... from the advice that you‘re giving to a foreign government. 

MADDOW:  So become a consultant.  Yes.

KLEIN:  It became a loophole, yes.

MADDOW:  Naomi Klein, journalist, author of many books, including, “No Logo,” which unbelievably is having its 10th anniversary edition released this week which makes me feel old, but also, it‘s awesome.  It‘s great to have you right now.  I know you are heading to Copenhagen for the big climate change talks.  Can we figure out some way to get you on the air from Copenhagen?  I‘d love to see you then.

KLEIN:  Absolutely.  That would be great.  All right.  Thanks, Rachel. 

MADDOW:  OK.  Nicole Wallace was a senior adviser to the McCain-Palin campaign.  For her trouble, Nicole Wallace has been on the business end of a lot of retrospective sliming by Sarah Palin. 

Ms. Wallace spoke to our show, going on the record, to de-slime herself and to try to set the record straight.  It is well worth a listen.  It is coming up exclusively here, next.  So stay where you are.

(COMMERCIAL BREAK)

MADDOW:  Still ahead, as we promised last night, former McCain campaign senior adviser, Nicole Wallace responded to this show about Sarah Palin‘s claims that she was the source of candidate Palin‘s many political troubles.  Ana Marie Cox will join us for that.

But first, one item on President Obama‘s agenda in China was this town hall event with students where he was asked about censorship. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, UNITED STATES PRESIDENT:  I think that the more freely information flows, the stronger the society becomes.  I‘m a big supporter of non-censorship. 

(END VIDEO CLIP)

MADDOW:  There was no national TV coverage of Obama‘s speech in China.  The “People‘s Daily Online” reported on the speech but made no mention of his comment on censorship. 

One Chinese blogger told the Associated Press that a transcript of the president‘s remarks was posted on one Chinese Web portal for a whole 27 minutes before it was taken down by censors. 

So if you were in China and you were not one of the lucky town hall attendees to hear the president‘s remarks on censorship in person, you probably did not hear them at all because China censored the anti-censorship remarks.  It‘s very nutty, I know. 

(COMMERCIAL BREAK)

MADDOW:  Carrie Prejean is being floated as a potential conservative candidate for Congress.  The problems with that are a legion, actually, even before you get to the idea of what she would campaign on.  But Kent Jones is not afraid to game out this political idea.  That is coming up.  Stay where you are. 

(COMMERCIAL BREAK)

MADDOW:  The politically disastrous roll out of Sarah Palin‘s new book officially started today.  But because the book was available to some a few days early, today‘s actually launch has been overshadowed by ongoing and now intensifying rebuttals, challenges to factual statements made in Palin‘s book. 

And it‘s not her political enemies who are making the splash over what Palin got wrong in the book.  The latest, for example, was John McCain, himself, who told “The Hill” newspaper that Palin was wrong when she wrote that the campaign billed her $50,000 for the cost of vetting her as a candidate. 

Sen. McCain telling the newspaper that the general council for

his campaign was correct when he shot down Palin‘s paying-for-vetting claim

a few days ago and further clarifying that the $50,000 legal bill Palin was

referring to, quote, “was over the ‘Troopergate.‘” 

McCain is saying that Palin was really paying legal bills for was her own ethics scandal in Alaska which predated the presidential campaign. 

It is remarkable to have Sen. McCain himself get involved personally in shooting down Palin‘s claims in her new book, particularly because McCain reportedly advised his staffers and aides to be as low key as possible in defending themselves against Palin‘s accusations, reportedly telling them in a conference call on Friday to at least avoid being interviewed about the book on TV. 

THE RACHEL MADDOW SHOW, however, has been able to do an off-camera but on-the-record interview with one of Palin‘s main targets in the book.  She is campaign senior adviser Nicole Wallace.  Palin blames her in the book for her expensive wardrobe being charged to the Republican Party, for her disastrous interview with Katie Couric and for a lot else besides. 

On the Couric interview, Palin writes that Nicole Wallace pushed her into that interview for dubious reasons, saying, quote, “Nicole went to explain that Katie needed a career boost.  ‘She just has such low self-esteem,‘ Nicole said.  She added that Katie is going through a tough time.  ‘She just feels she can‘t trust anybody.‘  I was thinking, this has to do with John McCain‘s campaign how?  Nicole said, ‘She wants you to like her.‘  Hearing all that, I almost started to feel sorry for her.” 

Asked if that was accurate, Nicole Wallace told us this, quote, “The whole notion there was a conversation where I tried to cajole her into a conversation with Katie Couric is fiction.  I am not someone who throws around the word ‘self-esteem.‘  It is a fictional description.  Katie Couric was selected because we did evening anchors.  I did not advocate an interview for anyone I am friends with.” 

Governor Palin was also asked by Oprah Winfrey about the Katie Couric interview. 

(BEGIN VIDEO CLIP)

OPRAH WINFREY, HOST, “THE OPRAH WINFREY SHOW”:  You do say that it wasn‘t your best interview.  Were you prepped for that interview? 

FMR. GOV. SARAH PALIN (R-AK), FORMER VICE PRESIDENTIAL CANDIDATE:  Not so much, because it was supposed to be a kind of a light-hearted fun, working mom speaking with working mom and the challenges that we have with teenage daughters. 

(END VIDEO CLIP)

MADDOW:  Nicole Wallace told us that that, too, is not at all accurate.  She says, quote, “We set up this interview on the day of the U.N. general assembly, with a walk-and-talk in front of the U.N.  It was never made as two working gals.  It‘s rationalization or justification or fiction.  That was supposed to be to highlight her foreign policy savvy in the context of the U.N. general assembly.  The picture is in front of the U.N. to highlight her expertise and readiness to be the vice president.  It wasn‘t about two working gals.” 

Finally, when asked for her overall reaction to “Going Rogue‘s” theme, that the Republican ticket in 2008 would have been more successful if the campaign had just followed Gov. Palin‘s instincts rather than those of people like Wallace and campaign strategist Steve Schmidt. 

Nicole Wallace gave us this response, quote, “I think she has probably a legitimate complaint, that things could have been better conceived and executed.  A book about that would have been painful, but not entirely unfair.  What she gets wrong is this personalization that Steve Schmidt and I were these lone villains - and that took place entirely in her imagination.” 

“Just like the Obama and Clinton campaigns, we were consensus-driven.  I think she fixated on me from very early on.  She hated me from the beginning.  I try not to take it personally.  The fact is that she wrote a book based on fabrications.” 

“She gave a brilliant convention speech - other interviews that inspire support.  But this book is a bizarre fixation on things that everyone else has moved on from.” 

Joining us now is Ana Marie Cox, national correspondent and host of “Inside Story” for Air America Radio.  Hi, Ana Marie.  Thanks for joining us. 

ANA MARIE COX, HOST, “INSIDE STORY”:  Hey, Rachel.

MADDOW:  So you spent a lot of time covering the campaign.  You obviously know Nicole Wallace from then.  What do you make of her rebuttal to Sarah Palin?  Does that sound like her voice to you? 

COX:  It sounds very much like her voice to me.  And it sounds pretty end of discussion to me almost about the book in general.  I think that Nicole speaks about the - she has the same feelings about the book that a lot of the other senior staffers have, which is that there are things that sound like they happened and they involve the same people and the same, you know, scenes like, like the U.N., but that actually the words that are exchanged and the background to those stories that is just not true. 

MADDOW:  In terms of that last very personal quote from Nicole Wallace saying, she told us that, “Sarah Palin hated me from the beginning.”  From your experience covering the campaign again, was the relationship between Palin and the staffers quite personally heated or at odds?  Was there a lot of personal friction? 

COX:  See, one of those things that‘s sort of strange to me in reading the book and reading the back and forth between them now is that at the beginning, I didn‘t sense that at all. 

I should say I covered Sarah Palin very briefly and did not get to know her and her staff the way that I got to know the McCain staff having traveled with them through the primary and the general election.

It was clear by the end of the campaign that there was a lack of patience, let‘s say, among the senior staffers for Sarah Palin.  I never saw this hate and I wonder when that started and if it might not have started for Sarah Palin after the campaign was over.  I mean, she sort of projected backwards to the very beginning. 

MADDOW:  Sarah Palin tells Oprah Winfrey there was no family vote on whether or not to run for vice president when she was asked last year.  She told Fox there was.  She wrote that she wanted to do “Saturday Night Live.”  The E-mails released to “Huffington Post” from the campaign show the opposite. 

She says, “Reagan got us out of a bigger recession than we‘re in now and he did it by killing the estate tax,” neither of which is true.  Are the fact-checking problems in this book - are the disprovable allegations going to be the biggest legacy of it? 

COX:  Oh, actually, I think there are two big legacies from this book, Rachel.  I think that fact-checking that is obviously a big problem.  The other thing is that she gets things wrong and she lies and she punches down the entire time. 

I mean, (UNINTELLIGIBLE), you never punch down.  You lower yourself.  She spends the entire book attacking staffers, I mean, people who you and I know the names of, but most people never would hear.  And it‘s very personal and it‘s very petty.

And I think it‘s hard to see her ever having an elected - you know, political career ever again.  I think that tonight, Rachel, this very night, you and I talking right now, this is as famous and as politically credible as Sarah Palin will ever be. 

MADDOW:  So when I said last Friday that her star was going to be lower next Friday than it was last week, do you think we‘re peaking? 

COX:  I think we might be peaking today just because of Oprah, you know.  I mean, you know, you are the queen of nighttime television.  She‘s the queen of daytime television.  I think she might have, you know, inched Sarah up a little bit there. 

But I would also like to say that all the McCain staffers I talked to - not a single one of them believe she even wants to run for elected office ever again.  They see her having grabbed as much of the spotlight as she can.  She‘s interested in being as big a celebrity as she can. 

But I think there‘s a fundamental realization.  I think she must realize it, too.  She cannot run for office having written a book like this.  This kind of score-settling book, who would ever work for Sarah Palin again after reading this?

MADDOW:  Yes.  That‘s a good point.  I should also note for our viewers that we repeatedly and vigorously requested an interview with Ms.  Palin herself.  And we were not awarded that prize. 

But we did get to talk to Ana Marie Cox, which is, frankly, more exciting.  Thanks for joining us, Ana Marie. 

COX:  Oh, thank you.  Thank you, Rachel. 

MADDOW:  Ana Marie is a correspondent with Air America Radio and the host of “Inside Story” there. 

All right.  Keith will be subjecting Sarah Palin‘s Oprah Winfrey interview to the inimitable “countdown” public dissection at the top of the hour.  So that‘s coming up.

And Kent Jones looks at the harrowing suggestion of candidate Carrie Prejean, a suggestion not made by Kent, but by an actual serving member of Congress.  That‘s coming up next.

(COMMERCIAL BREAK)

MADDOW:  We turn now to our pageant politics correspondent Kent Jones. 

Hi, Kent. 

KENT JONES, POP CULTURIST:  Hi, Rachel. 

MADDOW:  It‘s a very tough job.  I‘m really glad you‘re here to do it so I don‘t have to.

JONES:  Serious, serious topic.  You know, Congressman Jason Chaffetz from Utah reportedly said that former Miss California, Carrie Prejean, might have a serious future in politics. 

He said, quote, “Carrie has the ability to draw crowds, and if she has a strong message to go with that, who knows what she could do?  She has star power which can open doors.” 

Me?  I can‘t wait for this.  Sen. Prejean, anyone?  Anyone?

MADDOW:  How long do we have to wait? 

JONES:  Anyone? 

(BEGIN VIDEOTAPE)

(voice-over):  Lately, America is not looking good.  Hard times have left this nation tired, wrinkled, puffy.  Where is a new face to point us toward a beautiful tomorrow?  Where is the leader that will take us by the hand and say, “You need a spa day, girlfriend”? 

She‘s already here.  Carrie Prejean.  Why?  Because Carrie Prejean stands by her values. 

CARRIE PREJEAN, FORMER MISS CALIFORNIA USA:  A marriage should be between a man and a woman. 

JONES:  Because at age 22, Carrie Prejean isn‘t weighed down by years of politics as usual, or for that matter, years of any sort of career whatsoever as usual.  She‘s perma-tanned, rested and ready. 

Carrie Prejean knows what it‘s like to be judged.  When others said, “No, you can‘t,” she said, “Watch me,” in every conceivable format. 

OK, maybe not that one.  Most of all, Carrie Prejean is a fighter.  Carrie faced down the liberal elites and said, “I got this.” 

PREJEAN:  You‘re being inappropriate. 

JONES:  Now, don‘t voters deserve that same uncompromising spirit on the economy, the environment, international diplomacy?  Vote for Carrie Prejean, because it‘s ugly out there. 

(END VIDEOTAPE)

MADDOW:  I guess we have to wait 13 years before she could make a run for, right - you have to be 35.

JONES:  It‘s a technicality. 

MADDOW:  I guess that‘s true. 

(CROSSTALK)

JONES:  (UNINTELLIGIBLE) committees, you get the ball rolling. 

MADDOW:  I love the idea that the recommendation is based on her ability to draw crowds.  

JONES:  Yes, exactly. 

MADDOW:  I mean, car crashes and bar fights draw crowds. 

JONES:  Lots of things. 

MADDOW:  Yes.

JONES:  Wrestling.  You know, crowds. 

MADDOW:  Vote for the bar fights.  Star power!  Thank you, Kent.  Appreciate it.  And thank you for watching tonight.  We‘ll see you again tomorrow night.  “COUNTDOWN” with Keith Olbermann starts right now.  Have a good one.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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